Charging Orders – top tips & FAQ’s on using them to recover a money Judgment
Do you have a money Judgment that remains unpaid? Does the Judgment Debtor own property, land or shares? Read on to find out more about why you should be obtaining a Charging Order.
Over recent months when discussing enforcement of a Money Judgment with our clients or when we receive new enquires from prospective clients who need help enforcing a money Judgment, we receive a common response that a Charging Order is not an option they want to consider.
The usual reason being they want their money now. They are correct, a Charging Order is a way to secure the debt owed and does not necessarily bring a result of immediate payment and it is understandable that in most instances the Judgment Creditor wants to recover the debt owed in a timely manner.
That said, it is important to evaluate the likelihood of this and not to dismiss the benefit of securing the Money Judgment by obtaining a Charging Order. We would always advise if the debtor owns a property that you secure the Judgment debt by way of a Charging Order. This is of course subject to some basis investigations to ascertain the likely amount of equity in the property.
In our experience, we find securing the Judgment debt by way of a Charging Order in conjunction with another form of enforcement action is very effective. We would suggest instructing High Court Enforcement Officers in conjunction with a Charging Order. This gives you the comfort of you debt being secured whilst interest accrues at 8% per annum, with the knowledge that enforcement action is taking place and efforts are being made to locate assets of the debtor. It is surprising how a High Court Enforcement Officer turning up on your doorstep can focus the mind. If the Officers are unable to obtain full payment and sufficient assets are not located, they can, upon the Judgment Creditors consent, agree a reasonable payment proposal. In this instance you will have the security of knowing the debt is secured.
Both of these enforcement methods are relatively low in costs and can be used alone or in conjunction with each other. Judgment Creditors are able to claim fixed recoverable costs of these action from the Judgment Debtor.
Often we hear that a Charging Order is not an option as a client does not want to wait until the property is sold before their debt is paid. We regularly hear, we do not want to wait years to be paid.
A Charging Order is not the end of the road, you don’t just have to sit and wait for payment. You have the option to make an application to the court for an Order for Sale of the property. Look out for our next article in the series which features Order for Sales following a Charging Order and deals with frequently asked questions.
What is a Charging Order?
An order obtained from the court by a Judgment creditor which charges the property, land, stocks or shares of the Judgment Debtor.
Can a Charging Order be obtaining if the property is owned jointly by someone who is not party to the Judgment debt.
Yes, the Charging Order will create an equitable charge over the judgment debtor’s beneficial interest only, the beneficial interest of the co-owner who is not a party to the Judgment will not be affected.
How can I obtain a Charging Order?
Once a money Judgment has been obtained you can make an application to the court for a Charging Order.
If I instruct a lawyer, can I recover my legal costs?
The court will allow fixed costs pursuant to CPR 45.
Will interest accrue on the debt owed?
Yes, interest will accrue at 8% per annum.
Do I have to wait for the owner to decide to sell the property before I will recover my money?
No, you have the option to obtain an Order for Sale if the Judgment debt is over £1,000.00
If the Judgment is being paid by instalment, can I still obtain a Charging Order so the debt is secured?
Yes, The Tribunals, Courts & Enforcement Act 2007 introduced a change in 2012 to allow a Judgment Creditor to secure the debt owed to them even if there has not been a default on instalments.
Does the Judgment debt need to be a certain amount?
No but the Judgment debt will need to be over £1000.00 to apply for an Order for Sale.
What happens if there are other charges already registered on the property?
You can still obtain a Charging Order but you should note that charges are paid in order of the date they are obtained. If there are five prior charges, your debt will be settled subject to their being sufficient equity in the property.
Call us now if you have obtained a money judgment and the judgment debtor owns a property, land or shares to receive bespoke advise on securing your debt and other options open to you to enforce the judgment.